:1009080706050403020100Strategy in the Global

Environmentort break

Budapest Business School

Global economy and social challenges

Gocha Sharvashidze Gocha.sharvashidze.1@iliauni.edu.ge

Sales out from country

organization

Organization for which the world is like a

plate.

Global organization Multidomestic organization

1–3

Step by step globalization

• Globalization 1900–1941 sales was made only specific places near the see

• Globalization 1945–2000Duplicating business functions overseas

Create subsidiary

Buy another company

• Globalization 21st centuryMNEs become global collaboration networks

origin

Developed product

Come from…

These corporations origi-nated early in the 20th cen-tury and expanded after World War II

A multinational corpo-ration developed new products in its native country and manu-factured them abroad

Almost all the earliest and largest global firms were ei-ther American, Japanese, or West European

History of international organi-zations

Earn more return from

their distinctive competencies

Location economies

Ride down the experience

curve

“Going global” frequently requires

little or no adaptation of your

products

What is the profit from global expansion?

International corporate strategies

A. Decentralized strategic

And operating decisions

C.Costumized products

D. Avoid global competition

International corporate-level strategies

1. Multidomestic organization

D. Avoid global competition

Deals with all other

differences

A multidomestic strategy makes most sense when there are high pressures For local responsiveness and low pressures for cost reduction

Offers standardized products across country markets

Strategic und operating decisions cen-tralized at home office

Produces lower risk

Is less responsive to local market opportunities

Cost advantage and aggressive pricing

ALLPPT

International corporate-level strategies

International corporate strategies

2. Global strategy

A multidomestic strategy makes most sense in those cases where there are strong pessures for cost and demands are minimal

International corporate strategies3. Transnational strategies

Seeks to achieve both global efficiency and local re-sponsiveness A

B

C

D

Requires both global coordination and local flexi-bility with this strategy/structure combination

Challenging, but becoming increasingly necessary to compete in international markets

Increasingly used as a strategy

Transnational companies are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market.

The chose of entry made

Exporting

Licensing

Franchising

Joint ventures Wholly owned subsidiaries

• Maintain leadership in Retail sector

• Roll out a network in the US and the world

• creating a positive brand image and increase awareness of the organization

• Open new retail branches in the network • Create a convenient

menu types

• Take away costumers from the local small competitors

• Use Menu differentiation and decrease prices, expenses and create healthy product

• Develop a network of restaurants and daily discounts to attract new customers.

1–11

Wal-mart Retreats from Germany

• Wal-mart entered Germany Acquisition of 21 stores and 74 hypermarkets

• Wal-mart duplicated its U.S. policies and applied them in Germany Employees refused to accept those policies

• Wal-mart faced significant cultural differences

• Wal-mart could not develop efficient economies of scale and distribution centers to drive cost down

• The result is a defeated Wal-mart that sold its stores to Metro.

• ALDI, another of Wal-mart’s competitors in Germany, is now expanding aggressively in the U.S.

International Sales as % of Total

Data from 201010–12

Corporate Tax Rates

Institutional Difference Matters

10–13

CRITICIZM OF GLOBAL ORGANIZATIONS

Invasive advertising and corporate lobbying

Creation of monopolies in the market and elimi-nation of local competitors.

Depletion of resources due to their continuous use by these corporations.

Centralization of R&D operations in their home country.

Low consideration for human rights and welfare.

The problem of Dumping

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